Deposit return schemes FAQ

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Want to know more about deposit return systems?
We answer some of your most frequently asked questions.

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Deposit return systems (also known as deposit return schemes or DRS) for beverage container recycling have been shown to have significant benefits for the planet, communities and the economy. But what is a deposit return system, how does it work and how effective can it be?

How does a container deposit return scheme work?

Deposit return systems for beverage containers work by adding a small extra deposit on top of the price of a beverage – such as those in plastic/glass bottles and aluminum cans – which is refunded to the consumer when they return the empty drink container for recycling. Also known as container deposit schemes or bottle bills, they are typically established through legislation passed by state or national governments.

Adding a financial value to the used container motivates people to recycle, and communicates the materials also have a value to society as a resource.

Image of kids picking up littered bottles

How do deposit schemes benefit the environment?

DRSs help combat litter, increase recycling, reduce greenhouse gas emissions, and drive a circular economy.

Beverage container litter as a proportion of all litter is 66% less in regions with a deposit system than those without¹. In Europe, deposit systems achieve an average PET bottle collection for recycling rate of 94%, compared to other curbside recycling schemes, which average a 47% collection rate.² Across the US, deposit containers are captured for recycling at a rate of 72%, vs 27% for non-deposit containers³, with Michigan and Oregon achieving return rates above 85%.⁴

Image of plastic bottles in bags and on ground

Why do we need both curbside recycling and deposit return?

These systems complement each other in fighting waste and litter. To achieve “circularity”, manufacturers need systems that retain material quality. For food safety, bottle manufacturers have more rigorous quality specifications for recycled content than a producer of carpet or fiberglass. Manufacturers value the food-grade recycled material collected in a DRS, for achieving recycled-content commitments for new drink containers.⁵ For example, PET bales collected and processed through US DRSs can have a value around 40% greater than PET collected through curbside.⁶

There are many examples where DRSs and household recycling together achieve high collection rates, but no case of high rates where household recycling is the sole collection system.⁷ British Columbia, for example, achieves an 82% deposit container collection rate⁸ and 70% packaging/paper product collection.⁹

Female employee stocking shelves with water bottles in a store

Do all retailers participate in a deposit scheme?

Yes. Retailers play a critical role by charging the deposit to consumers at the start of the process. Since DRSs strive to make redeeming one’s deposit money as easy as it was to charge the deposit in the first place, retailers who sell beverages are almost always required to take back containers and refund deposits. Policymakers have made allowances for small stores (e.g. less than 100 m²) by limiting the number of containers a consumer can redeem per day, or allowing such stores to opt in to the system. In some markets, depots complement the return-to-retail network by offering an option for those returning high volumes of bottles and cans for recycling.

Learn more about return to retail

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Are retailers compensated for accepting containers?

Mostly yes, and compensation varies among states and territories – but in some cases, like Oregon, Germany and the Netherlands: no. It may be specified in statute (e.g. New York), or set as a percentage of the unredeemed deposits (e.g. 25% in Michigan). In Europe, compensation in the form of a handling fee is typically set by the Central System Administrator (CSA) in ways that progressively encourage cost-efficient investments by the retailer. For example, Norway and other markets award a higher handling fee to retailers who use compacting reverse vending machines rather than manual redemption.

What are the economic benefits for communities?

A common finding is that DRSs bring net savings for local communities.¹⁰ In 2009, Massachusetts considered expanding its DRS to additional drink categories like water. A Department of Environmental Protection study found that while municipalities would lose US$899,000 in material sales, the update would bring net savings of $4.2-6.9 million. Shifting material from curbside recycling to a DRS would save $4.2-5 million on collection costs, $0.5-2.3 million on disposal, and $500,000 on litter clean-up.

In addition to economic savings, deposit systems create jobs. A 2019 Eunomia study found that New York’s DRS supports 5,726 jobs through direct, indirect and induced effects. If the system expanded its beverage categories and introduced a higher (10-cent) deposit, it would create about 2,000 more jobs, bringing the total to 7,803.¹¹

Is a deposit return scheme a tax?

A container deposit in a deposit return system is not a tax, because it is refunded in full to the consumer when they return their empty drink container for recycling. To fulfill that promise, producers, retailers, policymakers and system administrators have an obligation to provide a convenient network of redemption points that makes it easy to return containers. If container return is too cumbersome for consumers, the deposit might be perceived as an unauthorized tax or “eco-fee”.

The deposit charged to consumers at purchase should be separately charged from the drink price and exempted from value-added or sales taxes on the product itself.

Learn more about convenient redemption systems for consumers

Clarissa Morawski Managing Director, Reloop

Overhead view of empty plastic bottles of assorted colours

What happens to unclaimed deposits?

In high-performing systems, unclaimed deposits are retained by the producer-operated, non-profit Central System Administrator. Most importantly, this allows for sustainable reinvestment in the system’s redemption infrastructure, material processing and marketing to consumers.

Image of boys at reverse vending machine

What is the cost of purchasing return infrastructure?

Many redemption providers offer reverse vending machines (RVMs) for more efficient and convenient return of bottles and cans, compared to manual handling. RVMs range in size (from standalone machines as little as 0.9m², to through-the-wall machines with multiple storage cabinets) and capability (like number of storage areas and material types accepted). So, the choice of RVM and its cost depends on the size of redemption site and DRS container types.

For redemption providers, RVMs might be paid through the purchase, rental or leasing of the unit, and service packages. In some markets, payment is instead based on the volume of containers returned through the machines. This lets redemption to providers gain the benefits of an RVM upfront and pay it off over time (known as a "throughput lease"). In most DRSs, redemption locations are paid a “handling fee” to compensate for the labor associated with container returns, space, consumables, and their monetary investment in return infrastructure.

Smiling woman handing over a voucher from a deposit return machine

How is the risk of “fraudulent” redemption managed?

Policymakers or Central System Administrators design systems with this in mind, putting in place protocols, governance and technology to enhance the integrity of the system. High-performing systems use a redemption network connected to the internet to collect and monitor data, which can be used for auditing and enforcement to prioritize responses and help ensure compliance. Some offer incentives for the use of unique barcodes, plus visual and/or security markings on containers that automated redemption equipment can identify.

Reverse vending machines are highly sophisticated and can identify fraud attempts, rejecting containers that do not belong to the system. Smaller collection points will accept containers manually, identifying their eligibility through the visual marking.

Learn more about container deposit markings and barcodes

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Deposit return scheme best practices

Learn the success factors of the world's highest-performing deposit return systems for recycling beverage containers.

Download TOMRA’s white paper discussing what effective deposit return systems deliver, the key elements high-performing deposit systems share, and dozens of case studies on real-world implementation of deposit return policy.

Download white paper

Footnotes

Deposit return schemes: Frequently asked questions